The high-profile Victoria’s Secret Hong Kong flagship store has been closed suddenly. According to multiple reports, employees were all laid off last night (June 24) on the even of Hong Kong’s public holiday.
Signs were placed on the store’s entrance announcing the closure and telling customers they could continue to shop online. People visiting the store today could see stock being boxed in the store.
Operated by Victoria’s Secret’s US parent Limited Brands, the store’s future was questioned by Inside Retail on several occasions, most recently last month as part of a strategic review of the company’s Chinese operations.
The Victoria’s Secret Hong Kong store opened two years ago after another struggling US retailer Forever 21 quit the site. The lingerie brand’s four-story flagship featured a whole level for its Pink brand, and a floor dedicated to high-end products, complete with the city’s most luxurious fitting rooms.
Sources said that Limited Brands was paying US$903,000 a month for the 50,000sqft space, which is about half the rent Forever 21 reportedly paid previously. In return, they signed a 10-year lease in 2017 which runs until August 2027. It took nearly a year to fit the store out.
It is not clear what deal – if any – Limited Brands has agreed to in order to exit the space, however, a senior real estate industry source said last month he doubted the then rumors that the store would close because of the length of the lease.
“They have a long lease and can’t just walk away. I would be surprised if the landlord takes backspace voluntarily.”
Our source said the site would be difficult space to fill as it is so large and needs significant capital expenditure to convert into multiple retail spaces or refurbish to suit another brand.
“If the landlord did take it back, it would need to be sub-divided as it was before with multiple tenants.”
Another source told a Hong Kong publication that Limited Brands would face a $77 million bill for terminating the contract early – equivalent to nearly 90 months rent.
In May, Limited Brands reported a 37-per-cent slump in first-quarter sales to $1.65 billion, with revenue from Victoria’s Secret down 45.6 percent, in part due to store closures relating to Covid-19.
Subsequent to that, a company executive told an analysts’ briefing that it was “evaluating strategic alternatives to reduce or eliminate losses in the UK and China”. The Victoria’s Secret UK business subsequently collapsed early this month.